A partnership deserving of skepticism, scrutiny

Published: Wednesday, August 21, 2013 at 02:50 PM.

Tuesday night an executive for a textile firm told Burlington’s City Council that he considers the two entities “partners.”

Ahem, that can’t be good news for taxpayers.

And it isn’t. The council voted to approve an incentives package for Kayser-Roth Corp. — its new apparent business partner — in order to grease the skids for an $18 million expansion of one of the Greensboro-based company’s sock factories in the city. Burlington’s bill for this is $360,000 paid in four $90,000 installments. It’s almost like a furniture store layaway plan only this tab is based on a previously set formula for paying out what some call corporate welfare — 2 percent of the company’s new taxable investments.

The council’s action comes a day after the Alamance County Board of Commissioners agreed to an incentives package for Kayser-Roth totaling $360,000 — paid in five annual $72,000 installments.

Before going any further, there is a plus side to Kayser-Roth’s proposal. Our community gets additional tax revenues from the expanded plant and an estimated 50 new jobs at a time when this county could badly use each and every one. Kayser-Roth CFO Todd Howard also said the number of jobs could be higher. At $10.44 an hour, the jobs aren’t the highest paying in the market, but it’s nothing to sneer at, either.

Tuesday night an executive for a textile firm told Burlington’s City Council that he considers the two entities “partners.”

Ahem, that can’t be good news for taxpayers.

And it isn’t. The council voted to approve an incentives package for Kayser-Roth Corp. — its new apparent business partner — in order to grease the skids for an $18 million expansion of one of the Greensboro-based company’s sock factories in the city. Burlington’s bill for this is $360,000 paid in four $90,000 installments. It’s almost like a furniture store layaway plan only this tab is based on a previously set formula for paying out what some call corporate welfare — 2 percent of the company’s new taxable investments.

The council’s action comes a day after the Alamance County Board of Commissioners agreed to an incentives package for Kayser-Roth totaling $360,000 — paid in five annual $72,000 installments.

Before going any further, there is a plus side to Kayser-Roth’s proposal. Our community gets additional tax revenues from the expanded plant and an estimated 50 new jobs at a time when this county could badly use each and every one. Kayser-Roth CFO Todd Howard also said the number of jobs could be higher. At $10.44 an hour, the jobs aren’t the highest paying in the market, but it’s nothing to sneer at, either.

People need work. They need to be paid.

And Kayser-Roth’s stated goal, Howard told both the county and city, is a “made-in-the-USA initiative.” He said the company wants to produce a sock that is not only produced in the U.S. but sold “at a better price than what our foreign competitors are offering.”

That’s a worthy goal manufacturers should have been following all along. It’s gratifying to see such sentiments return to an area so deeply rooted in the textile industry. Kayser-Roth has a long history in Alamance County. Brands produced by Kayser-Roth include Hue, Jockey, No Nonsense and Calvin Klein hosiery.

So we applaud those things.

What gives us pause — besides our usual heartburn over government-funded cash incentives for corporations — is this idea that government is now viewed as a necessary and often mandatory partner in private business ventures. Such a notion begs several questions, including: How many potential “partners” are out there with their hands out and can the city and county afford them all?

It is not the job of government on any level to “partner” with corporations, or any private business for that matter. There was a time when private businesses invested in communities with profits and expected nothing in return but greater profits, a willing work force and some infrastructure help from local governments — including water and sewer hookups, access to natural gas or a zoning variance here and there. Industries once chafed at the very idea of partnering with government. And government should feel the same way about industries.

Today, businesses not only demand cash money from taxpayers, but expect it. The matter is taken for granted as a course of operation for an industry to move or expand in a community. It’s the cost of doing business for governments, or so it seems.

Commissioner Tim Sutton has often voiced opposition to incentives, and voted against this Kayser-Roth deal. Burlington City Councilman David Huffman expressed similar reservations before voting for it. Huffman called on the state to disallow incentives from local governments. The Alamance County Commissioners did the same a couple of years ago. The idea is to take local governments out of the business of bidding against each other for jobs.

Our view remains unchanged. Business ventures should succeed or fail on their own without taxpaying partners.